36 lines
2.4 KiB
Plaintext
36 lines
2.4 KiB
Plaintext
978 Glossary
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Resistance: a term in technical analysis indicating a price area higher than the cur
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rent stock price where an abundance of supply exists for the stock, and therefore
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the stock may have trouble rising through the price. See also Support.
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Return (on investment): the percentage profit that one makes, or might make, on
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his investment.
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Return if Exercised: the return that a covered call writer would make if the under
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lying stock were called away.
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Return if Unchanged: the return that an investor would make on a particular posi
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tion if the underlying stock were unchanged in price at the expiration of the
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options in the position.
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Reversal Arbitrage: a riskless arbitrage that involves selling the stock short, writing
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a put, and buying a call. The options have the same terms. See also Conversion
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Arbitrage.
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Reverse Hedge: a strategy in which one sells the underlying stock short and buys
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calls on more shares than he has sold short. This is also called a synthetic straddle
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and is an outmoded strategy for stocks that have listed puts trading. See also Ratio
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Write, Straddle.
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Reverse Strategy: a general name that is given to strategies that are the opposite of
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better-known strategies. For example, a ratio spread consists of buying calls at a
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lower strike and selling more calls at a higher strike. A reverse ratio spread, also
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known as a backspread, consists of selling the calls at the lower strike and buying
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more calls at the higher strike. The results are obviously directly opposite to each
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other. See also Reverse Hedge Ratio Write, Reverse Hedge.
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Rho: the measure of how much an option changes in price for an incremental mov<'
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(generally l % ) in short-term interest rates; more significant for longer-term or i11-
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the-money options.
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Risk Arbitrage: a form of arbitrage that has some risk associated with it. Commonly
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refers to potential takeover situations in which the arbitrageur buys the stock of
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the company about to be taken over and sells the stock of the company that is
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effecting the takeover. See also Dividend Arbitrage.
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Roll: a follow-up action in which the strategist closes options currently in the posi
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tion and opens other options with different terms, on the same underlying stock.
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See also Roll Down, Roll Forward, and Roll Up.
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Roll Down: close out options at one strike and simultaneously open other options al
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a lower strike. |